In an earlier post, part of our CoC SHOULD BE EASY! series, we explored Due Diligence standards in a general way for all three of the CoC programs. A key part of this process – one that deserves and is getting a lot of attention right now – is the Risk Assessment process for the FSC Controlled Wood (CW) program.
The FSC CW Risk Assessment system is perhaps the most peculiar part of the whole CoC business. It is a key component of FSC’s version of Due Diligence. It is also painfully transparent, as we shall see.
To understand where Risk Assessment fits into the overall CoC process, please take a look at Part 4 of our CoC SHOULD BE EASY! series. The section called “Nuts & Bolts” shows the 2-step process that FSC requires for Due Diligence. The first of these steps is a Geographic Risk Assessment. The idea is to first define the geographic region (referred to as a “district of origin”) where wood products are procured. Various public sources of information are then consulted to determine the likelihood (i.e. risk) that buying wood inside that region will violate the ethical principals of the FSC.
The ethical principals that FSC defines for CW Risk Assessment are defined in the standard:
- illegal harvesting
- violation of traditional and human rights
- threats to “high conservation values”
- excessive forest conversion
- genetically modified (GMO) trees
In addition to the 5 principals, the CW standard includes an “Annex 2: Approach and criteria for assessing risk”. I have no doubt that this guidance was conceived to limit variation and ensure consistent and practical application of the standard. In practice, though, the opposite has been true.
The key weakness in the CW Risk Assessment format is the fact that Risk Assessments are geographic in scope – designed to be applied to a “district of origin”. But they remain the responsibility of individual companies. This ensured that – from the very start – the level of rigor and detail in the individual Risk Assessments has varied widely.
To make matters worse, FSC never managed to effectively define “district of origin”. In practice it varies from narrow supplier relationships (e.g. a sawmill buying logs) to entire countries as large as the USA and Canada.
FSC assigned to Certification Bodies the responsibility to “review and accept” Risk Assessments for their certified clients, but gave them almost no criteria to judge them by. Much of the early review was very cursory – little more than a check that all 5 principals were addressed. More recently, the expectations have risen somewhat, but results are extremely inconsistent.
Finally, FSC designed the whole system to be transparent. This means that every active CW Risk Assessment is (or should be) posted on the FSC Certificate Database (info.fsc.org).
2 Risk Assessments in 2 Clicks
Let’s use the FSC Database to examine two contrasting examples.
Click #1: This first example is posted by Weyerhaeuser, a prominent company who’s name is familiar to anyone in the US wood products business. A quick browse through their website gives a strong impression of them as an industry leader. Their FSC certificate listing provides a good outline of extensive business in the paper, pulp, land, and lumber sectors across the USA. Their Risk Assessment is extensive and exhaustive in scope. It includes tables, maps, and charts; cross-references other analyses; and incorporates carefully drafted policy positions on every relevant issue that might be raised. Clearly the work of a “best in class” organization.
Click #2: This second example is posted by Midwest Hardwood Corp. Their website and FSC certificate listing describe them as a medium-sized hardwood lumber company, headquartered in Minnesota, with operations in Wisconsin and Kentucky. Their Risk Assessment is actually somewhat broader in scope than Weyerhaeuser’s – covering 35 US states and 4 Canadian provinces. It’s depth and detail, however, is very different: a simple, succinct table, 3 1/2 pages in length, outlining, in minimal detail, risk conclusions for each of the 5 FSC CW indicators, with reference to the information sources used in the analysis.
This comparison is not intended to criticize either of these companies. It is hard not to be impressed by Weyerhaeuser’s approach. One might even be tempted to display it as an example of what a good Risk Assessment should look like. On the other hand, Midwest appears to have gotten the job done, too. And they were pretty efficient about it.
Which is better? It is hard to tell.
Change is Coming – Slowly
The underlying problem here is the requirement for every CW certified company to do their own Risk Assessment. This was always a bad idea – a fact that was officially accepted by FSC at the general assembly in 2011. This initiated an effort to replace all of the widely disconnected individual Risk Assessments with officially-recognized versions for each country. A sensible move to simplify an over-complicated system; that seemed to be welcomed by everyone involved. National Risk Assessments (now inevitably referred to as NRA’s) were expected by the end of 2012.
Almost as soon as this good news was received, the story began to change. FSC staff and stakeholders quickly made an obvious discovery: this stuff is complicated! The initial optimistic timeline was delayed. Worse still, FSC began to display one of its most dangerous tendencies: creeping complexity. Every challenge encountered seemed to lead to a more complex response. More than 2 years later, the muddle seems to be worse than ever.
The best way to summarize the current situation is by reference to FSC’s website, where they continue to do a good job of maintaining transparency for this bewildering process. Here is a summary outline:
- A general summary of the CW revision process is found here. There are a number of embedded links to follow. Look also at the green column on the left where an amazing variety of detail can be found.
- A history of CW is offered. Similar in some ways to my summary above, but (of course) longer and providing some helpful, philosophical background to the standard.
- The current status of National Risk Assessments is recorded; including a map showing both approved and in-progress NRA’s, with links to their sources. Important links on this page include a new policy for Risk Assessment which is still in review and should replace the Annex 2 procedures we referred to above.
- An explanation of a brand new Centralized National Risk Assessment program is found here. CNRA’s are an effort by FSC-IC to bridge the gap between the currently-incomplete network of approved NRA’s and the individual company RA’s that are now set to expire in 2015.
- Almost all of this new policy framework remains in draft form – even as the implementation schedule moves forward. The latest consultation process is documented here – including a comprehensive (if a bit overwhelming) list of new documents available for download. Importantly, this includes the latest draft of FSC-STD-40-005 v.3, which will be the next version of FSC’s central Controlled Wood standard – upon which everything else will depend.
If you are confused, don’t feel lonely. Everyone else is, too. We are convinced that FSC staff are sincere in their intent to manage this in a responsive and transparent way. But the sheer volume and scope of material is completely out of control. The program has become hopelessly overcomplicated and beyond the point where any productive feedback can be expected.
Two Positive Signs
The first sign that all is not lost is this: staff and senior leadership at FSC are showing real signs of recognizing that they have a problem and taking steps towards resolving it. Buried in the blizzard of CW web pages at ic.fsc.org can be found this page, entitled “Future Development of a Controlled Wood Strategy”. Could this be a sign that the out-of-control complexity of the FSC system might be reaching its peak? We’ll have to wait and see.
Another positive sign is the work of FSC’s national affiliate here in the USA. FSC-US has a small, talented, professional staff group who have been doing good work on a National Risk Assessment format. I have hopes that their efforts – along with counterparts in other large economies around the world – can provide a badly-needed counterpoint to the intensely bureaucratic culture that has evolved in Bonn.